The GBP/CAD pair had a rocky month of May, as we fell from the previous gap that was filled. This is typically very negative, and now it looks as if the neck support level is near the 1.70 level. However, I believe that the British pound should continue to strengthen, and when I look at the 3 weeks in a row that formed a shooting star is on the weekly chart, I recognize that a move above the 1.7840 level should send this market much higher. For me, that means this pair will then go looking for the 1.83 handle, and then the 1.90 level after that. After all, the British pound itself looks to be strengthening overall, so I believe that the buyers may be returning. That’s not to say this is get a be an easy month, but I believe June is going to be pivotal for the British pound.
Breakout, or breakdown?
So now I think it’s only a matter of time before we either breakout to the upside, or breakdown below the 1.70 level. If we did breakdown, I think that would be a very negative sign. However, not only have we filled the gap and now it could be broken above, we have made a “higher high” on the weekly chart. Breaking above those 3 shooting stars would be extraordinarily bullish and not only have me buying this pair, but buying in hand over fist. The British pound was sold off rather drastically due to election polls that have now been counteracted in the other direction, so I believe that we are continuing to see the British pound bottom a bit against most currencies, just in time for the election. I believe that it’s only a matter of time before we rally, especially considering that the oil markets seem so messy currently, which of course has a massive effect on the Canadian dollar.
